CHAPTER EIGHT
Judicial Review of Acts and Omissions of EU
Institutions: The Annulment Action
8.1. Introduction
[8:01] This chapter concerns the annulment action, under which Member States, EU institutions
or indeed private persons or undertakings may bring proceedings before the Court of Justice,
seeking to have a legal measure taken by an EU institution annulled. Later it will be necessary
to consider the grounds on which such actions may be brought (i.e. the legal basis on which EU
measures may be annulled), the types of measures which may be challenged, and the effects of
an annulment, but first it is necessary to set out the persons or institutions who have standing
to bring an Article 263 action and the circumstances in which they will be deemed to have such
standing.
8.2. Standing under Article 263 TFEU
Article 263 TFEU provides as follows:
“The Court of Justice of the European Union shall review the legality of legislative acts, of acts of
the Council, of the Commission and of the European Central Bank, other than recommendations
and opinions, and of acts of the European Parliament and of the European Council intended to
produce legal effects vis-à-vis third parties. It shall also review the legality of acts of bodies, offices
or agencies of the Union intended to produce legal effects vis-à-vis third parties.
It shall for this purpose have jurisdiction in actions brought by a Member State, the European
Parliament, the Council or the Commission on grounds of lack of competence, infringement of an
essential procedural requirement, infringement of the Treaties or of any rule of law relating to their
application, or misuse of powers.
The Court shall have jurisdiction under the same conditions in actions brought by the Court of
Auditors, by the European Central Bank and by the Committee of the Regions for the purpose of
protecting their prerogatives.
Any natural or legal person may, under the conditions laid down in the first and second paragraphs,
institute proceedings against an act addressed to that person or which is of direct and individual
concern to them, and against a regulatory act which is of direct concern to them and does not entail
implementing measures.”
Privileged and semi-privileged applicants
[8:02] By virtue of Article 263(1), the so-called ‘privileged’ applicants – Member States, the
Commission, the Council, and the European Parliament – have a general power to seek judicial
review of the acts of the EU institutions, subject only to the relevant limitation periods. The
privileged applicants in effect have what Chalmers et al. (2010, p. 413) call “general, unrestrained
policing powers against the EU institutions”. Article 263(3) lists several bodies – the European
Central Bank (ECB), the Court of Auditors, and the Committee of the Regions – which are also
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entitled to bring judicial review proceedings, but only “for the purpose of protecting their
prerogatives”. These bodies are often referred to as ‘semi-privileged’ applicants. Their standing
to seek judicial review extends only to matters affecting their own prerogatives (i.e. legal
entitlements).
­Non-privileged applicants
[8:03] Article 263(4), by contrast, provides that any natural or legal person “may institute
proceedings against an act addressed to that person or which is of direct and individual concern to them,
and against a regulatory act which is of direct concern to them and does not entail implementing
measures.” This formulation – which replaced a more convoluted previous wording – quite
clearly encompasses Decisions (which are addressed to a person), as well as, where the test of
“direct and individual concern” met, Regulations and Directives. This test has been the main focus
of the case law. Before passing on to that case law, another change introduced by the Treaty of
Lisbon should be noted, namely the reference to “regulatory acts” in the second half of Article
263(4). This will be discussed further below.
Direct concern
[8:04] The case law has identified two key aspects to the notion of direct concern. The first is that
there must be a causal link between the act under review and the infliction of harm on the
applicant. The second aspect is that the interest affected by the measure must be legal in nature:
it must be affect his/her legal position directly. These can be summarised as follows:
“The contested measure must directly produce effects on the legal situation of the person concerned
and its implementation must be purely automatic and follow solely from the [Union] rules, without
the application of other intermediate measures.”1
[8:05] As to the first aspect, the usual approach is to ask whether the measure taken by the body
or institution left Member States any discretion as to its implementation: If it did, then the
institution may validly argue that the Member State (and not it) is responsible for any harm
done to the applicant? In Piraiki-Pitraiki, upon the accession of Greece to the Union, France went
to the Commission to ask for permission to continue a discriminatory regime which restricted
imports of Greek cotton. The Commission granted the permission sought. When Greek cotton
exporters challenged this decision, the Commission argued that its decision had left the French
authorities with a discretion as to whether to continue with the restrictive regime. The Court
rejected this argument, saying that in this case there was only a very small, theoretical possibility
that the French authorities would not have continue with their approach, once granted
permission. The approach of the Court has been criticised, with authors such as Chalmers et al
(2010), p 416, suggesting that in circumstances such as this the Commission and the Member
State should be jointly liable.
[8:06] The second aspect of ‘direct concern’, as noted above, is that interest affected must be one
recognised by the Court as being legally protected. Front National is a good example here.2 That
was a case in which a number of MEP’s, together with their representative group (the Front
National), challenged a decision of the European Parliament to decline to grant them group
status in the Parliament. This disadvantaged the applicants by affording them less parliamentary
rights and financial advantages, including in relation to secretarial support. The General Court
held that the applicants were directly concerned by this decision, but the ECJ overturned this
ruling, holding that although MEP’s such as the applicants, in running for election, may hope
BUPA and others v Commission [2008] ECR II-81 (Case T-29/03)
Front National v European Parliament [2004] ECR I-6289 (Case C-486/01)
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that they will be in a position to promote their ideals in the same way as other parties and under
the same conditions, this did not confer a (legal) right on them to be entitled to form a group or
join one.
[8:07] The test that measures must “affect directly the legal situation of the [applicant]” can be
somewhat uncertain, however, as it may not always be clear when a ‘legal’ interest is affected.
Thus in Regione Siciliana, the Court of Justice overturned a decision of the General Court and
held the test was not met in a case where the Commission had cancelled regional assistance for
the construction of a dam in Sicily, thereby depriving the region of assistance it would otherwise
have received and requiring it to repay money already received. It was the Italian Republic that
had made the application; the region was merely the administering authority. Therefore the
region had no legal right to the money and so, despite the financial impact, could not be said to
be “directly concerned”.3
There may be further discussion of the notion of direct concern in the case law post-Lisbon,
given that it is the principal criterion in the new provision of Article 263 regarding “regulatory
acts”.
Individual concern
[8:08] The other part of the test is “individual concern”. The leading case is Plaumann.4 The
background to that case was that the Commission refused an application by Germany for
authorisation to suspend customs duty on the importation of clementines. The applicant, an
importer of clementines, challenged the Commission’s Decision. The Court of Justice ruled that
he lacked standing – the Decision was not addressed to him and he had not demonstrated
“individual concern”. The Court stated:
“Persons other than those to whom a decision is addressed may only claim to be individually
concerned it that decision affects them by reason of certain attributes which are peculiar to them or
by reason of circumstances in which they are differentiated from all other persons and by virtue of
these factors distinguishes them individually just as in the case of the person addressed.”
[8:09] The Plaumann test accordingly requires that an applicant for judicial review differentiate
himself from all others by virtue of certain attributes or circumstances. The Court effectively
took the approach that, even though there were not that many persons who imported
clementines, in theory more or less anyone else could enter that business, and accordingly
Mr. Plauman was not sufficiently distinctive from everyone else. Hartley has suggested that the
Court was in effect drawing a distinction between fixed and open categories: An open category
is one where the membership is not fixed and determined when a measure comes into force
(and vice versa).5 The Plaumann analysis has been criticised as somewhat restrictive and artificial,
but it remains the approach followed by the Court.
[8:10] The open/closed category analysis was applied by the Court more recently, in, for
example, Commission v Koninklijke Friesland Campina,6 an example of a case in which the Plaumann
test was satisfied. There the applicant (KFC) challenged a Decision of the Commission that a
Dutch scheme, which gave tax benefits to companies carrying out international financing
activities. KFC had been refused entry to the scheme in 2001 after the announcement by the
Regione Siciliana v Commission [2007] ECR I-2591 (Case C-15/06 P) (for the first instance decision, see
[2005] ECR II-4139 (Case T-60/03))
4
Plaumann & Co. v Commission [1963] ECR 95 (Case 25/62)
5
T. Hartley, The Foundations of European Community Law: An Introduction to the Constitutional and
Administrative Law of the European Community, 6th ed., (Oxford University Press, 2007), p. 348.
6
Commission v Koninklijke Friesland Campina (Case C-519/07)
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Commission of an investigation into whether the scheme amounted to illegal state aid. The
Commission decided in 2003 that the scheme was illegal but stated that all undertakings
benefiting from it could continue to do so. KFC unsuccessfully challenged the Decision before
the ECJ (having at first succeeded before the General Court), but the ECJ did accept that the
applicant met the “individual concern” test. The Court of Justice repeated the Plaumann formula
and then stated as follows:
“An undertaking cannot, in principle, contest a Commission decision prohibiting a sectoral aid
scheme if it is concerned by that decision solely by virtue of belonging to the sector in question
and being a potential beneficiary of the scheme. Such a decision is, vis-à-vis that undertaking, a
measure of general application covering situations which are determined objectively and entails
legal effects for a class of persons envisaged in a general and abstract manner …
By contrast, the Court has held that, where a contested measure affects a group of persons who
were identified or identifiable when that measure was adopted by reason of criteria specific to the
members of the group, those persons might be individually concerned by that measure inasmuch as
they form part of a limited class of traders …”7
[8:11] The Court held that KFC formed part of a closed group of undertakings – and not of an
indefinite number of undertakings belonging to the sector concerned – specifically affected by
the contested decision. Because admission to the scheme in question was (or should have been)
automatic and as of right, once certain criteria were fulfilled, then the undertakings whose
authorisation was pending must be regarded as individually concerned by the contested
decision.
[8:12] As Chalmers et al. note,8 the result of KFC is that an applicant must seemingly have had
a pre-existing legal relationship, which was disrupted by the measure under review. Thus the
Court has held that applicant were individually concerned in the case of traders who had signed
contracts which could not be carried out, due to a Commission Decision9; and also where
applicants were part of a small group who had benefited from a tax scheme which was
withdrawn because of a Commission Decision.10
[8:13] ‘Individual concern’ may also be found if special procedural safeguards are provided
prior to an act being adopted. In Vischim,11 EU legislation provided for the phasing out certain
plant protection products. Vischim, the manufacturer of a product called chlorothalonil, was
among the companies allowed to present information as to the qualities of its product. A
subsequent Directive banned chlorothalonil. The General Court took the view that the company
was individually concerned because of the procedural safeguards provided by the original
legislation.
[8:14] Similarly, in Pfizer Animal Health v Council,12 it was argued that, in challenging a
Regulation, Pfizer was in no different position from all other producers or all other potential
producers of a product called virginiamycin. It turned out that there was in fact Pfizer was the
only producer of virginiamycin in the world, from which the Regulation withdrew
authorisation for use as an additive in foodstuffs. The Commission argued that this was
merely a coincidence, and that that fact was in no way relevant to the adoption of the
regulation. Pfizer did not enjoy a manufacturing monopoly and there was nothing to prevent
ibid, para. 53–54
Chalmers, Davies and Monti, European Union Law, 2nd ed., (Cambridge University Press, 2010), p. 420
9
Piraiki-Pitraiki and others v Commission [1985] ECR 207 (Case 11/82); Sofrimport v Commission [1990]
ECR I-2447.
10
Belgium and Forum 187 v Commission [2006] ECR I-5749 (Joined Cases C-182/03 and C-217/03)
11
Vischim [2009] ECR II-3911 (Case T-420/05) (Judgment of 7 October 2009)
12
Pfizer Animal Health v Council [2002] ECR II-3305 (Case T-13/99)
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other undertakings from manufacturing the substance. The Court of Justice held that, even
though the Regulation was general in its nature and application, Pfizer was individually
concerned with the Regulation. However, the Court held that the fact that Pfizer was the only
undertaking to market the substance in the EU was not, in itself, such as to distinguish Pfizer
from all the other traders concerned:
“It must be borne in mind that the fact that it is possible to determine the number or even the
identity of the persons to whom a measure applies at a given moment with a greater or lesser degree
of precision does not mean that those persons must be considered to be individually concerned by
it, as long as it is established that the measure is applied by virtue of an objective legal or factual
situation defined by it”.13
[8:15] On the contrary, it is necessary to ascertain whether an applicant was affected by the
adoption of the measure by reason of certain attributes which are peculiar to it or by reason of
circumstances in which it is differentiated from all other persons. By making an application for
further authorisation of its product, Pfizer was entitled to the benefit of certain legal safeguards
(under Directive 70/524) and “enjoy[ed] a particular legal situation” and therefore met this
standard.14
Is such a restrictive approach as that adopted in Plaumann necessary or appropriate?
As has been noted:
“The bulk of the academic literature has … been highly critical of the Plaumann formula. It is
viewed, in the first place, as highly restrictive, preventing applicants adversely affected by Union
measures from any effective judicial redress. There is also a sense that it is textually unjustified.
The text of Article 263 TFEU clearly does not require it. Nor does it justify it. There is nothing
in the Treaty to imply that the phrase ‘direct and individual concern’ should be interpreted as
narrowly as the Court chose to in Plaumann.”15
It is, at first sight at least, a somewhat strange test by which a court can hold that an applicant
is not individually concerned with a Union measure, even though it is the only party affected
by it.16
[8:16] The most potent criticism of Plaumann, however, has come from Advocate General Jacobs.
In his Opinion in Union de Pequenos, AG Jacobs argued the case for modification of the Plaumann
approach. Advocate General Jacobs set up the argument as follows:
“As is common ground in the present case, the case-law of the Court of Justice acknowledges the
principle that an individual who considers himself wronged by a measure which deprives him of a
right or advantage under Community law must have access to a remedy against that measure and
be able to obtain complete judicial protection.
That principle is, as the Court has repeatedly stated, grounded in the constitutional traditions
common to the Member States and in Articles 6 and 13 of the European Convention on Human
Rights. Moreover, the Charter of fundamental rights of the European Union, while itself not legally
binding, proclaims a generally recognised principle in stating in Article 47 that ‘[e]veryone whose
rights and freedoms guaranteed by the law of the Union are violated has the right to an effective
remedy before a tribunal’.”17
ibid, para. 89
ibid, para. 98–100
15
Chalmers, Davies and Monti, European Union Law, 2nd ed., (Cambridge University Press, 2010), p. 422
16
As was the case in Spijker v Commission [1983] ECR 2559 (Case 231/82).
17
ibid, para. 38–39
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Advocate General Jacobs then set out a proposed alternative approach, which it is worth quoting
in detail:
“The key to the problem of judicial protection against unlawful Community acts lies therefore, in
my view, in the notion of individual concern laid down in the fourth paragraph of Article 230 EC.
There are no compelling reasons to read into that notion a requirement that an individual applicant
seeking to challenge a general measure must be differentiated from all others affected by it in the
same way as an addressee. On that reading, the greater the number of persons affected by a measure
the less likely it is that judicial review under the fourth paragraph of Article 230 EC will be made
available. The fact that a measure adversely affects a large number of individuals, causing widespread rather than limited harm, provides however to my mind a positive reason for accepting a
direct challenge by one or more of those individuals.
In my opinion, it should therefore be accepted that a person is to be regarded as individually
concerned by a Community measure where, by reason of his particular circumstances, the measure
has, or is liable to have, a substantial adverse effect on his interests.
Advantages of the suggested interpretation of the notion of individual concern
A development along those lines of the case-law on the interpretation of Article 230 EC would have
several very substantial advantages.
First, if one rejects the solutions advanced by UPA and by the Council and Commission - and there
are very strong reasons for doing so - it seems the only way to avoid what may in some cases be a
total lack of judicial protection - a déni de justice.
Second, the suggested interpretation of the notion of individual concern would considerably
improve judicial protection. By laying down a more generous test for standing for individual
applicants than that adopted by the Court in the existing case-law, it would not only ensure that
individual applicants who are directly and adversely affected by Community measures are never
left without a judicial remedy; it would also allow issues of validity of general measures to be
addressed in the context of the procedure which is best suited to resolving them, and in which
effective interim relief is available.
Third, it would also have the great advantage of providing clarity to a body of case-law which has
often, and rightly in my view, been criticised for its complexity and lack of coherence, and which
may make it difficult for practitioners to advise in what court to take proceedings, or even lead them
to take parallel proceedings in the national courts and the Court of First Instance.
Fourth, by ruling that individual applicants are individually concerned by general measures which
affect them adversely, the Court of Justice would encourage the use of direct actions to resolve issues
of validity, thus limiting the number of challenges raised via Article [267 TFEU]. That would,
as explained above, be beneficial for legal certainty and the uniform application of Community
law. It may be noted in that regard that the TWD case-law - according to which an individual
cannot challenge a measure via Article [267 TFEU] where, although there was no doubt about his
standing under the fourth paragraph of Article [263 TFEU], he omitted to take action within the
time-limit laid down in the fifth paragraph of that Article - would, in my view, not normally extend
to general measures. Individuals who were adversely affected by general measures would therefore
not be precluded by that case-law from challenging such measures before national courts. None the
less, if the notion of individual concern were interpreted in the way I have suggested, and standing
for individuals accordingly liberalised, it may be expected that many challenges would be brought
by way of direct action before the Court of First Instance.
A point of equal, or even greater, importance is that the interpretation of Article [263 TFEU]
which I propose would shift the emphasis of judicial review from questions of admissibility to
questions of substance. While it may be accepted that the Community legislative process should be
protected against undue judicial intervention, such protection can be more properly achieved by the
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application of substantive standards of judicial review which allow the institutions an appropriate
‘margin of appreciation’ in the exercise of their powers than by the application of strict rules on
admissibility which have the effect of ‘blindly’ excluding applicants without consideration of the
merits of the arguments they put forward.”18
[8:17] Shortly after this Opinion was handed down, the General Court approved of this reasoning
in Jego-Quéré,19 agreeing with Advocate General Jacobs’s view that there was no compelling
reason to read into the notion of individual concern a requirement that an individual applicant
seeking to challenge a general measure must be differentiated from all others affected by it in
the same way as an addressee.
[8:18] However, when Union de Pequenos came before the Court of Justice, it declined to follow
the advice of its Advocate General and instead stuck rigidly to the Plaumann formula, and it has
since continued to do so.20
[8:19] The Plaumann approach has also been criticised on the grounds that it is easier to meet
when some financial or material interest has been prejudiced, and so favours trading or business
interests over the causes of groups representing public interests such as the environment, the
regions or the consumer.21
[8:20] Particular difficulties indeed arise in relation to actions brought in the name of the
protection of such general public interests (sometimes called “public goods”), which do not
benefit any particular persons in an individual sense. The classic example is the environment.
The leading case is Greenpeace v Commission,22 where several individuals and three associations
concerned with the protection of the environment sought the annulment of a Commission
decision granting Spain financial assistance for the construction of two electric power stations
in the Canary Islands. The General Court rejected an attempt to argue that in such a case the
criteria set out in the case law should be expanded or relaxed, stating:
“The applicants are 16 private individuals who rely either on their objective status as “local
resident”, “fisherman” or “farmer” or on their position as persons concerned by the consequences
which the building of two power stations might have on local tourism, on the health of Canary
Island residents and on the environment. They do not, therefore, rely on any attribute substantially
distinct from those of all the people who live or pursue an activity in the areas concerned and so
for them the contested decision, in so far as it grants financial assistance for the construction of
two power stations on Gran Canaria and Tenerife, is a measure whose effects are likely to impinge
on, objectively, generally and in the abstract, various categories of person and in fact any person
residing or staying temporarily in the areas concerned.
The applicants thus cannot be affected by the contested decision other than in the same manner as
any other local resident, fisherman, farmer or tourist who is, or might be in the future, in the same
situation.”23
As to the possibility of an association such as Greenpeace having standing, the General Court
stated:
“It has consistently been held that an association formed for the protection of the collective interests
of a category of persons cannot be considered to be directly and individually concerned for the
ibid, para. 59–6
Jego-Quéré [2002] ECR II-2365 (Case T-177/01)
20
See, for example, Flaherty v Commission [2008] ECR I-2649 (Joined Cases C-373/06 P, C-379/06 P and
C-382/06 P); Sahlstedt v Commission (Judgment of 23 April 2009) (Case C-362/06 P).
21
Chalmers, Davies and Monti, European Union Law, 2nd ed., (Cambridge University Press, 2010), p. 425
22 Greenpeace and others v Commission [1995] ECR II-2205 (Case T-585/93); see also Danielsson and others v
Commission [1995] ECR II-3051 and An Taisce v Commission [1994] ECR II-733 (Case T-461/93)
23 Greenpeace and others v Commission [1995] ECR II-2205 (Case T-585/93), para. 54–55
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purposes of the fourth paragraph of Article 173 of the Treaty by a measure affecting the general
interests of that category, and is therefore not entitled to bring an action for annulment where its
members may not do so individually”.24
Consequently, the application was declared inadmissible. On appeal, the Court of Justice held
that the interpretation taken by the General Court was “consonant with the settled case-law of
the Court of Justice,”25 and dismissed the appeal.
[8:21] In passing, it should be noted that the Court of Justice has accepted, in the Bieticoltori
decision,26 that interest groups or associations may have standing to bring an annulment
application due to the prior granting of certain procedural entitlements set out in EU law or the
practice of EU institutions:
“It should be pointed out, second, that an application for annulment lodged by an association may
be admissible in three types of situation, namely:
(a) where a legislative provision expressly confers a range of procedural powers on trade
associations …;
(b) where the association represents the interests of undertakings having locus standi to seek the
annulment of the provision in question …;
(c) where the association is distinguished because its own interests as an association are affected, in
particular because its position as a negotiator has been affected by the measure whose annulment
is sought ….
In those three types of situation the Court of Justice and the Court of First Instance have also taken
into account the participation of the associations in question in the procedure ….” 27
Such cases are likely to be unusual and are in effect dependent on a pre-existing relationship or
recognition of certain persons or associations, whether in law or as part of consultations or
negotiations. In other words, they would involve “insiders”.
[8:22] Arguments may be made in favour of the current position as well as against it.28 For
example, it might be argued that a more relaxed standard would allow significantly more
challenges by private parties seeking the annulment of Union measures, thereby unduly
disrupting the process of Union decision-making. This “floodgate” argument has particular force
in the context of the EU, where legislation is the result of a balancing act between all the Member
States and necessarily reflects compromises agreed to by them, perhaps sometimes after difficult
negotiations. The other argument that is sometimes made is that a restrictive approach is
necessary to protect the position and status of the Court of Justice by channelling applicants
challenging Union measures into national courts which, under the principle of subsidiarity, are
principally called upon to defend the rights of individuals, and who can if necessary make a
preliminary reference to the Court of Justice as to the validity of a Union act or measure.
[8:23] For now though it appears that the approach adopted in Plaumann is effectively set in
stone. One possible avenue for further challenge to the Plaumann formula may derive from the
Charter of Fundamental Rights, (which post-Lisbon has binding force) and in particular Article
47 thereof and the principle of effect utile. However, such arguments were raised by Advocate
ibid, para. 59
Greenpeace and others v Commission [1998] ECR I-1651 (Case C-321/95 P), para. 27
26
Associazione Nazionale Bietcoltori v Council [1998] ECR II-4191 (Case T-38/98)
27
ibid, para. 25–26
28
See Chalmers, Davies and Monti, European Union Law, 2nd ed., (Cambridge University Press, 2010),
pp. 421–422.
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General Jacobs in Union de Pequenos and so it must be considered that the Court is unlikely to
alter its position in the short term.
8.3. What may be reviewed?
[8:24] Article 263(1) TFEU allows review of the following categories of acts
‘legislative acts’: This is a new addition by the Treaty of Lisbon. The category of legislative acts
is defined by Article 289(3) as comprising ‘[l]egal acts adopted by legislative procedure’.
Pursuant to Article 289(1) and 289(3), any act adopted by the ordinary legislative procedure
or the special legislative procedure must take the form of a regulation, a directive or a decision,
which are the three forms of legally binding acts defined by Article 288 TFEU.
‘acts of the Council, of the Commission and of the European Central Bank, other than recommendations
and opinions’: The two excluded categories – recommendation and opinions – are stated by
Article 288 to have “no binding force.” Naturally, acts in the form of regulations, directives or
decisions come into this category. The Court has, however, taken the view that it should
extend to all acts in whatever form, which were intended to produce legal effects vis-à-vis
third parties.
‘acts of the European Parliament and of the European Council intended to produce legal effects vis-àvis third parties’: The wording relating to acts of the European Parliament reflects the case law
(including Les Verts v Parliament29). The reference to the Council was an addition by the Treaty
of Lisbon and reflects the new status of the Council as an institution of the Union with formal
power to make decisions.
‘acts of bodies, offices or agencies of the Union intended to produce legal effects vis-à-vis third parties’:
This again was an addition by the Treaty of Lisbon, but one which reflected the case law.
[8:25] The Court had long taken the view that Article 263 may, as a general rule, be used to
challenge measures adopted by EU institutions, in whatever form, as long as they were intended
to produce legal effects vis-à-vis third parties. And indeed, as Wyatt and Dashwood note:
“Successive amendments to the first paragraph of the Article [263] have been designed to give
explicit effect to that principle.”30
[8:26] Thus the Court held in ERTA (also an important case on the question of the Union’s
powers in the field of external relations) that an informal agreement by the Council establishing
that negotiation and conclusion of a European road transport agreement would be undertaken
by the Member States, rather than by the Commission, was an ‘act’ susceptible of judicial review.
The Court noted that Article 263 treated acts of binding force as open to review, but held that it
would be inconsistent with the purpose of Article 263, which is to ensure that the law is observed
pursuant to Article 19(1) TEU, “to limit the availability of this procedure merely to categories of
measures referred to by Article [288 TFEU].” Therefore the Court held that an action for
annulment must be available “in the case of all measures adopted by the institutions, whatever
their nature of form, which are intended to have legal effects.”
[8:27] Likewise in Les Verts v Parliament,31 a French political grouping sought the annulment of
two measures adopted by the European Parliament. At that time the Parliament was not
mentioned in (what is now) Article 288. Nevertheless the Court held that it would be inconsistent
with the general spirit and scheme of the Treaty to exclude such acts from review. The Treaty
Parti écologiste “Les Verts” v European Parliament [1986] ECR 1339 (Case 294/83)
Wyatt and Dashwood, European Union Law, 6th ed. (2011), p. 158
31
Parti écologiste “Les Verts” v European Parliament [1986] ECR 1339 (Case 294/83)
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had adopted “a complete system of legal remedies designed to allow the Court to review the
legality of measures adopted by the institutions.”32
[8:28] The possibility of reviewing an act of a body other than one listed in Article 288 was
considered by the General Court (formerly known as the Court of First Instance) in Sogelma.33
The impugned measure in that case was a decision of the European Reconstruction Agency
(ERA) to cancel a tendering procedure. The legislation governing the ERA provided for the
General Court to have jurisdiction as to the non-contractual liability of the ERA, but made no
mention of jurisdiction regarding annulment proceedings. The General Court reiterated what it
had said in Les Verts – that “any act of a Community body intended to produce legal effects visà-vis third parties must be open to judicial review” – and continued:
“[T]he situation of Community bodies endowed with power to take measures intended to produce
legal effects is identical to the situation which led to the Les Verts judgment; it cannot be acceptable,
in a Community based on the rule of law, that such acts escape judicial review.”34
[8:29] Omission by an EU institution, or failure to act, may in certain circumstances be deemed
to be a positive decision capable of review under Article 263. (The position is somewhat
complicated by the fact that there is a quite separate remedy for ‘failure to act’ under Article 265
TFEU.) For example, in Eurocoton v Council,35 a challenge was brought to the Council’s failure to
adopt proposals put forward by the Commission which would have imposed a definitive antidumping duty.36 It was held that the non-adoption had “all the characteristics of a reviewable
act within the meaning of [Article 263 TFEU],” in that it produced “binding legal effects capable
of affecting the appellants’ interests”.37 The key factor here was that a fixed time limit, within
which particular anti-dumping proceedings must be terminated, was about to expire. This gave
the Council’s failure to act a positive legal effect.
[8:30] Eurocoton was distinguished in a case involving excessive budgetary deficits run up by
France and Germany.38 There the Commission sought to argue that the failure of the Council to
adopt measures against France and Germany for breach of the budget deficit rules (i.e. measures
as provided for in Article 126(8) and (9) TFEU) amounted to an act susceptible of review under
Article 263. The Court held that, in contrast to Eurocoton, the excess deficit procedure did not lay
down any fixed time within which the Council must act, meaning that the Council’s omission
to do so to date did not prevent it doing so in future and accordingly did not amount to an act
having the necessary legal effect. The proper remedy was an action for failure to act under
Article 265 TFEU (which would not in any event have succeeded on the facts of the case).
[8:31] It should also be noted, that annulment proceedings cannot be brought in certain
circumstances, even though the acts in question may appear to have produced legal effects.
That applies to a preparatory step in a procedure having several stages, such as the procedure
leading to an adoption by the Commission of a decision that an undertaking is in breach of
competition rules.39 Only the final decision in the procedure may be challenged. Also not
i bid, para. 23. The contested measure must, however (as noted below), be one which produced binding
legal effects such as to prejudice the interests of the applicant: see Le Pen v European Parliament [2003]
ECR II-125 (Case T-353/00).
33
Sogelma v EAR [2008] ECR II-2771 (Case C-411/06)
34
ibid, para. 37
35
Eurocoton v Council [2003] ECR I—10091 (Case C-76/01)
36
‘Dumping’ here refers to the practice of importing products into the Union from a non-Member State
at prices lower than their normal value in the exporting country, resulting in an injury to a particular
industry.
37
ibid, para. 67
38
Commission v Council [2004] ECR I-6649 (Case C-27/04)
39
IBM v Commission [1981] ECR 2639 (Case 60/81)
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capable of review is an act which merely confirms a previous decision, which itself was not
challenged within time.40 Sometimes the position will be less clear-cut. In Philip Morris
International v Commission,41 the applicants challenged a decision of the Commission to bring
proceedings against them in the United States relating to the prevention of alleged illegal
importation of cigarettes into the EU. The General Court held that the mere decision to bring the
proceedings did not alter the parties’ legal position or definitively determine the parties’
obligations. This ruling has been criticised42 on the grounds that it might be said that the
applicants’ legal position was clearly altered by having to either participate in the proceedings
or else being at risk of judgment being given against them in default of appearance. Furthermore,
one of the arguments made was that the Commission had exceeded its powers in merely
instituting the proceedings. In addition, although the Court referred to an action for damages
against the Union (under Article 340) as a possible remedy, that would not arise until the
applicants had lost the action brought by the Commission, perhaps after considerable time and
expense.
[8:32] Lastly, it is necessary to be aware of the new category of reviewable act added to Article
263 TFEU by the Treaty of Lisbon, namely “a regulatory act which is of direct concern … and does
not entail implementing measures”. No definition of “regulatory act” is provided, and so the scope
of this new provision is not entirely clear.43
8.4. Grounds of review
The second paragraph of Article 263 TFEU provides that for the purpose of actions brought
under Art. 263, the Court of Justice
“shall … have jurisdiction in actions brought by a Member State, the European Parliament,
the Council or the Commission on grounds of lack of competence, infringement of an essential
procedural requirement, infringement of the Treaties or of any rule of law relating to their
application, or misuse of powers.”
Over the time the Court has built up a body of case law analysing the meaning of these four
grounds. The Court has stated that:
“in its review of legality …, the Community judicature conducts a full review as to whether the
Commission applied properly the relevant rules of law. On the other hand, the [General Court]
cannot take the place of the Commission on issues where the latter must carry out complex
economic and ecological assessments in this context. In this respect, the Court is obliged to confine
itself to verifying that the measure in question is not vitiated by a manifest error or a misuse of
powers, that the competent authority did not clearly exceed the bounds of its discretion and that
the procedural guarantees, which are of particularly fundamental importance in this context, have
been fully observed.”44
[8:33] It will be seen from this passage that the review conducted by the Court goes to whether
the contested measures met applicable legal standards under the headings of competence,
Irish Cement Ltd v Commission [1988] ECR 6473 (Joined Cases 166 and 220/86)
Philip Morris International and others v Commission [2003] ECR II-1 (Joined Cases T-377, 379, 380/00
and T-260 and 272/01).
42
See Wyatt and Dashwood, European Union Law, 6th ed. (2011), p. 160
43
See, for example: J. Usher, “Direct and individual concern – an effective remedy or a conventional
solution” (2003) 28 European Law Review 575; A. Dashwood and A. Johnston, “The institutions of the
enlarged EU under the Constitutional Treaty” (2005) 42 Common Market Law Review 1481.
44
Commission v Estonia [2009] ECR II-3463 (Case T-263/07), para. 55
40
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procedural fairness, substantive legality and misuse of power. The Court has no power to
consider the merits of contested measures.
It is necessary to consider the four grounds briefly in turn.
i. Lack of competence
[8:34] An EU institution may only act where it has competence to do so.45 Competence in this
sense means legal authority, in the same way that the EU may only legislate in areas in which it
has been conferred with competence (i.e. legal authority) by Member States. A finding of lack of
competence will be rare. The Union’s powers are very broad, as exemplified by Article 352
TFEU, which allows the Union to take measures to attain objectives set out in the Treaties,
where no other legislative procedure is available.46
ii. Breach of essential procedural requirement
[8:35] This ground essentially provides a remedy for lack of fair procedures comparable to that
available in domestic (Irish) administrative law. Thus annulment actions may be brought
against EU measures on the basis of: failure to consult the European Parliament as required by
the Treaty47; failure to give an interested party an opportunity to make his views known (perhaps
by way of an oral hearing) before making a decision which adversely affects them48; or failure
to give adequate reasons.49 The duty to give reasons is expressly provided for in Article 296
TFEU.50 The Court, in the case of Omega Air, has commented on this duty as follows:
“…it should be borne in mind that it is settled case-law that the statement of reasons required by
Article 253 EC must be adapted to the nature of the act in question. It must disclose in a clear
and unequivocal fashion the reasoning followed by the Community institution which adopted the
measure in such a way as to make the persons concerned aware of the reasons for the measure
and to enable the Court to exercise its power of review. It follows from the case-law that it is not
necessary for details of all relevant factual and legal aspects to be given. The question whether the
statement of the grounds for an act meets the requirements of Article 253 EC must be assessed
with regard not only to its wording but also to its context and to all the legal rules governing the
matter in question ….
The Court has also held that if the contested measure clearly discloses the essential objective
pursued by the institution, it would be excessive to require a specific statement of reasons for the
various technical choices made”.51
See, for example, Germany v Parliament and Council (tobacco advertising) [2000] ECR I-8419
(Case C-376/98); Parliament v Council (safe countries of origin) [2008] ECR I-318 (Case C-133/06).
46
Article 352, first para: “If action by the Union should prove necessary, within the framework of the
policies defined in the Treaties, to attain one of the objectives set out in the Treaties, and the Treaties
have not provided the necessary powers, the Council, acting unanimously on a proposal from the
Commission and after obtaining the consent of the European Parliament, shall adopt the appropriate
measures. Where the measures in question are adopted by the Council in accordance with a special
legislative procedure, it shall also act unanimously on a proposal from the Commission and after
obtaining the consent of the European Parliament.”
47
Roquette Frères v Council [1980] ECR 3333 (Case 138/79)
48
L
isrestal and others v Commission [1994] ECR II-1177 (Case T-450/93), para. 42; Foshan Shunde Yongjian
Housewares and Hardware Co. v Commission [2009] ECR I-9147 (Case C-141/08 P)
49
Commission v European Parliament and Council [2003] ECR I-937 (Case C-378/00), para. 34
50
Article 296 TFEU, second para.: “Legal acts shall state the reasons on which they are based and shall
refer to any proposals, initiatives, recommendations, requests or opinions required by the Treaties.”
51
R v Secretary of State, ex parte Omega [2002] ECR I-2569 (Joined Cases C-27/00 and C-122/00), para. 46–47
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[8:36] The Court in Omega Air emphasised that reasons may be sufficient, even if it might be
preferable if they had been slightly more extensive, and this may apply particularly in the case
of technical regulations:
“It would have been desirable to have given a more detailed explanation of the choice of by-pass ratio
as the sole criterion and of its being fixed at 3. However, the statement of reasons in a regulation
of general application cannot be required to specify the various facts, frequently very numerous
and complex, on the basis of which the regulation was adopted, nor a fortiori to provide a more or
less complete technical evaluation of those facts ... That is particularly the case where the relevant
factual and technical elements are well known to the circles concerned.”52
As regards rights of defence, the Court has put the position as follows:
“[R]espect for the rights of the defence is, in all proceedings initiated against a person which are liable
to culminate in a measure adversely affecting that person, a fundamental principle of Community
law which must be guaranteed even in the absence of any rules governing the proceedings in
question. That principle requires that the addressees of decisions which significantly affect their
interests should be placed in a position in which they may effectively make known their views.”53
This principle requires that “addressees of decisions which significantly affect their interests should be
placed in a position in which they may effectively make known their views”.54
[8:37] Much the same logic was famously applied in Kadi v Council and Commission,55 a case in
which the applicants challenged an EU Regulation implementing UN sanctions restricting
financial and material resources to individuals who were on a list of persons suspected of being
associated with Osama bin Laden and the al-Qaeda network. The applicant, Kadi, was on the
list. He argued, successfully, that his rights of due process had been breached, because he had
not been given an opportunity to make his case as to why he should not be on the list or to
challenge the grounds for placing him on the list. The Court justified its decision on the following
basis:
“… [T]he principle of effective judicial protection is a general principle of Community law stemming
from the constitutional traditions common to the Member States, which has been enshrined in
Articles 6 and 13 of the ECHR, this principle having furthermore been reaffirmed by Article 47 of
the Charter of Fundamental Rights of the European Union …
In addition, having regard to the Court’s case-law in other fields …, it must be held in this instance
that the effectiveness of judicial review, which it must be possible to apply to the lawfulness of the
grounds on which, in these cases, the name of a person or entity is included in the list forming
Annex I to the contested regulation and leading to the imposition on those persons or entities
of a body of restrictive measures, means that the Community authority in question is bound to
communicate those grounds to the person or entity concerned, so far as possible, either when that
inclusion is decided on or, at the very least, as swiftly as possible after that decision in order to
enable those persons or entities to exercise, within the periods prescribed, their right to bring an
action.
Observance of that obligation to communicate the grounds is necessary both to enable the persons to
whom restrictive measures are addressed to defend their rights in the best possible conditions and to
decide, with full knowledge of the relevant facts, whether there is any point in their applying to the
ibid, para. 51
F
oshan Shunde Yongjian Housewares and Hardware Co. v Commission [2009] ECR I-9147 (Case C-141/08
P), para. 83
54
ibid, para. 83
55
K
adi and Al Barakaat International Foundation v Council and Commission [2008] ECR I-6351 (Joined Cases
C-402/05 P and C-415/05 P)
52
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Community judicature …, and to put the latter fully in a position in which it may carry out the review
of the lawfulness of the Community measure in question which is its duty under the EC Treaty.”56
iii. Infringement of Treaty provisions or any rule relating to their application
[8:38] This is the widest of the four grounds and in a sense subsumes the other three. It covers
the substantive (as opposed to procedural legality) of the contested measure. A measure of an
EU institution may be annulled where it is incompatible with a Treaty provision, with any
secondary legislation or with any rule of law relevant to the interpretation or application of
same. This encompasses the body of general principles developed by the Court of Justice, such
as fundamental rights, proportionality and legitimate expectations.57 A contested measure may
also be annulled and declared void, if it infringes an international agreement to which the Union
is a signatory, even if the agreement is not one which has direct effect within the Union.58
iv. Misuse of powers/Manifest error of assessment
[8:39] “Misuse of power” is a difficult ground to establish, as it effectively refers to the intention
or purpose behind the contested measure, as opposed to its content. It is a claim that the measure
was introduced for purposes other than those stated. Thus in R v Secretary of State, ex parte
British American Tobacco,59 it was argued that an EU Directive on the manufacture and sale of
tobacco products was not merely intended to harmonise legal differences between Member
States from the point of view of the internal market, but was intended as to protect public
health, an area in which the Union’s competence was more limited. The Court of Justice
responded as follows:
“As the Court has repeatedly held, a measure is vitiated by misuse of powers only if it appears
on the basis of objective, relevant and consistent evidence to have been taken with the exclusive
or main purpose of achieving an end other than that stated or evading a procedure specifically
prescribed by the Treaty for dealing with the circumstances of the case”.60
The Court in that case held that the applicants had not met this standard.
[8:40] The Court has, as is evident from the passage from Commission v Estonia set out above,
held that contested measures may be reviewed under this head for what it calls “manifest error
of assessment”. The leading case on manifest error of assessment is the Tetra Laval a merger
case.61 There the Commission had concluded that a conglomerate merger between Tetra Laval,
which specialised in cartons, and Sidel, which specialised in PET packaging, would allow Tetra
Laval to leverage its dominant position in the market for cartons to persuade customers opting
for PET to use Sidel’s goods, thereby eliminating competition on the PET market. The General
Court found that the Commission had committed a manifest error of assessment, in relying on
reports which overestimated the possibility of leveraging and the possibility for growth in the
PET market. The Court of Justice upheld this ruling on appeal, stating as follows:
“Whilst the Court recognises that the Commission has a margin of discretion with regard to
economic matters, that does not mean that the Community Courts must refrain from reviewing the
Commission’s interpretation of information of an economic nature. Not only must the Community
Courts, inter alia, establish whether the evidence relied on is factually accurate, reliable and
ibid, para. 335–337
See Chapter 4.
58
Netherlands v European Parliament and Council [2001] 3 CMLR 49 (Case C-377/98)
59
R v Secretary of State, ex parte British American Tobacco [2002] ECR I-11453 (Case C-491/01)
60
ibid, para. 189
61
Commission v Tetra Laval [2005] ECR I-987 (Case C-12/03 P)
56
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consistent but also whether that evidence contains all the information which must be taken into
account in order to assess a complex situation and whether it is capable of substantiating the
conclusions drawn from it.
…
The analysis of a ‘conglomerate-type’ concentration is a prospective analysis in which, first, the
consideration of a lengthy period of time in the future and, secondly, the leveraging necessary to
give rise to a significant impediment to effective competition mean that the chains of cause and
effect are dimly discernible, uncertain and difficult to establish. That being so, the quality of the
evidence produced by the Commission in order to establish that it is necessary to adopt a decision
declaring the concentration incompatible with the common market is particularly important, since
that evidence must support the Commission’s conclusion that, if such a decision were not adopted,
the economic development envisaged by it would be plausible.
It follows from those various factors that the [General Court] did not err in law when it set out
the tests to be applied in the exercise of its power of judicial review or when it specified the quality
of the evidence which the Commission is required to produce in order to demonstrate that the
requirements of … the Regulation are satisfied.”62
Having analysed the General Court’s judgment, the Court of Justice held as follows:
“It follows from these examples that the [General Court] carried out its review in the manner
required of it, as set out in paragraph 39 of this judgment. It explained and set out the reasons why
the Commission’s conclusions seemed to it to be inaccurate in that they were based on insufficient,
incomplete, insignificant and inconsistent evidence.”63
Thus it appears that EU measures may be reviewed where they are “based on insufficient,
incomplete, insignificant and inconsistent evidence” or whether the evidence is capable of
substantiating the conclusions reached.
8.5. Time limit
[8:41] The sixth paragraph of Article 263 TFEU provides that an action for annulment must be
brought “within two months of the publication of the measure, or of its notification to the
plaintiff, or, in the absence thereof, of the day on which it came to the notice of the latter”.
Article 297 TFEU requires that all legislative acts, regulations, directives addressed to all
Member States and decisions with no specific addressee are to be published in the Official
Journal. Other directives and decisions need not necessarily be published, but in practice many
of them are.
[8:42] The relevant date is the date of publication (not the date on the cover of the journal), even
if the applicant had in fact become aware of the provision before publication. So held in Germany
v Council,64 where the Court stated that “the criterion of the day on which a measure came to the
knowledge of an applicant, as the starting point of the period prescribed for instituting
proceedings, is subsidiary to the criteria of publication or notification of the measure.”65
[8:43] Note, however, that where the time limit for commencing proceedings runs from
publication of the contested measure, there is a 14-day grace period: time runs “from the end of
ibid, para. 39, 44–45
ibid, para. 48
64
Germany v Council [1998] ECR I-973 (Case C-122/95)
65
ibid, para. 35. See similarly BAI v Commission [1999] ECR II-139 (T-14/96).
62
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the 14th day after the publication thereof in the Official Journal of the European Union”.66 This do
not apply where the act in question is a Commission Decision which is notified to the applicant:
In such a case, time starts running from the date of notification. It should also be noted that the
date on which an event occurs is not counted.67 The Court shall, in addition, make an allowance
of 10 days “on account of distance” between the Member State and Luxembourg.68
The Court has held that failure to observe the relevant time limit is an “absolute bar”69 to
bringing proceedings and is “not subject to the discretion of the parties or of the Court”.70
8.6. Effects of annulment
[8:44] According to Article 264(1) TFU, where the ECJ finds an annulment action under
Article 263 to be well founded, it “shall declare the act concerned to be void.” In order to
minimise potential disruption caused by the declaring of an act void, Article 264(2) provides
that “the Court shall, if it considers this necessary, state which of the effects of the act which it
has declared void shall be considered as definitive.” The Court held, in one case where it
annulled a Directive, that “important reasons of legal certainty, comparable to those which
operate in cases where certain regulations are annulled” justified it taking the step of ordering
the “maintain[ing] for the time being all the effects of the directive annulled, until such time as
the Council has replaced it with a new directive adopted on the proper legal basis.”71
[8:45] The Union Courts have no power to order the institution to take any particular steps,72
but the institution whose act has been declared void or whose failure to act is required by
Article 266 to “take the necessary measures to comply with the judgment of the Court of Justice
of the European Union.” Article 266 makes clear, however, that this requirement is without
prejudice to the possibility of non-contractual liability of the Union for damage caused by its
institutions or servants in the performance of their duties set out in Article 340.
Court of Justice Rules, Article 81(1) and General Court Rules, Article 102(1)
Court of Justice Rules, Article 80(1)(a) and General Court Rules, Article 101(1)
68
Court of Justice Rules, Article 81(2) and General Court Rules, Article 102(2)
69
M
utual Aid Administration Services NV v Commission [1992] ECR II-1335, (Joined Cases T-121/96 and
T-151/96) para. 39
70
ibid, para. 38
71
Parliament v Council [1992] ECR I-4193 (Case C-295/90), para. 26–27
72
DSM v Commission [1999] ECR I-4695 (Case C-5/93), para. 36
66
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